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A social dividend is a payment to each member of the public derived from the economic profits generated by publicly owned enterprises, constituting the individual's share of capital and resources owned by society. The social dividend is a component of many proposed models of socialist economic systems.
The social dividend is a key feature in many models of market socialism where socially owned enterprises operate for profit in a market economy. It would grant every citizen a share of the social surplus generated by publicly owned enterprises, potentially eliminating the need for social welfare programs, income redistribution and the administrative costs associated with such practices in capitalism.
These models of market socialism differ from cooperative variants of market socialism where the profits of each firm would be distributed among the members/employees of each individual firm as opposed to the public as a whole. Basic income is a similar concept sometimes contrasted with the social dividend.
Under a social dividend system, an individual would be entitled to a share of the social product produced by publicly owned assets. The social dividend would be received in addition to any normal wage or salary payments earned through employment.
Precursors and origins
Léon Walras, one of the founders of the neoclassical school of economics, believed that nationalized land and natural resources would provide a source of income to the state that would eliminate the need for income taxes.
Oskar Lange is credited with the first use of the phrase "social dividend". In Lange's theory of market socialism, a central planning board would allocate the profit and rent accumulated by public enterprises to achieve economic growth targets and ensure a reasonable amount of social equality through the provision of a social dividend to consumers and workers.
Notable economists who have included social dividend system in their models of socialism include Oskar Lange, Abba Lerner and James Meade. Contemporary economist who propose social dividends in the context of market socialism include James Yunker, John Roemer, Pranab Bardhan and David Schweickart.
In the model of market socialism outlined by American economist James Yunker, the social dividend represents each citizen's share of property income. Yunker's concept is almost identical to present-day capitalism, with enterprises organized as corporations with similar management structures, with the difference being that a government entity would own all the shares of major corporations, distributing the resulting income to every citizen.
In John Roemer's and Pranab Bardhan's model of market socialism, public ownership takes the form of public ownership of shares in firms. The dividend payments, instead of accruing to a small class of private owners, are divided among all adult citizens. The social dividend supplements wages and income derived from personal savings.
In Beyond the Profits System: Possibilities for the Post-Capitalist Era, economist Harry Shutt advocates a basic income system which would in effect replace all existing state social security and welfare functions with the exception of childcare. This measure would go along with his proposal for public and cooperative ownership of enterprises and the end of capital accumulation as a driving force in the economy for the makeup of a post-capitalist economy.
An unemployed individual would also be entitled to a share of the social dividend as a form of basic income, but the exact institutional arrangement varies among different proposals, for example, there might be certain constraints on the receipt of the dividend payment imposed on the unemployed.
Social dividends have an alternate definition which may be described as the citizen's egalitarian share of surplus tax revenue. This form of social dividend exists within the framework of capitalism since productive assets would be privately owned, operated for private profits and would not directly finance the social dividend.
Similar systems have been implemented to some degree on the basis of public ownership of natural resources, most notably in Alaska (Alaska Permanent Fund) and in Norway (The Government Pension Fund of Norway).
- Basic income
- Citizen's Dividend
- Lange model
- Public enterprise
- Profit (economics)
- Property income
- Social ownership
- Socialist economics
- Sovereign wealth fund
- Market socialism
- Negative income tax
- Social Dividend versus Basic Income Guarantee in Market Socialism, by Marangos, John. 2004. International Journal of Political Economy, vol. 34, no. 3, Fall 2004.
- The Social Dividend Under Market Socialism, by Yunker, James A. 1977 in Annals of Public and Cooperative Economics journal.
- Philosophy and the Problems of Work: A Reader, 2001, by Kory Schaff. ISBN 978-0742507951. (P.344): "A citizen in this society will receive income from three sources: wage income, which will vary depending on her skill and the amount of time she works, income forthcoming by savings, which will also vary across households, and the social dividend, that will be, in principle, approximately equal across households."
- On the Economic Theory of Socialism, by Lange, Oskar. 1936. The Review of Economic Studies, Vol. 4, No. 1: "It seems, therefore, convenient to regard the income of consumers as being composed of two parts: one part being the receipts for the labour services performed and the other part being a social dividend constituting the individual's share in the income derived from the capital and the natural resources owned by society."
- Philosophy and the Problems of Work: A Reader, 2001, by Kory Schaff. ISBN 978-0742507951. (P.344): "The second socialist aspect of this economy is that the profits of firms will not go to a small fraction of the citizenry but will be divided, after taxes, more or less equally among all adult citizens, taking a form that Oskar Lange called a social dividend."
- Shutt, Harry (March 15, 2010). Beyond the Profits System: Possibilities for the Post-Capitalist Era. Zed Books. p. 124. ISBN 978-1848134171.
a flat rate payment as of right to all resident citizens over the school leaving age, irrespective of means of employment status...it would in principle replace all existing social-security entitlements with the exception of child benefits.